14 September 2010 – final results

The group has reported annual results for the year to 31 May revealing a slight fall in revenue to £460m (2009: £503m), although underlying pre-tax profit increased by 20% to £34.3m (2009: £28.6m) helped by an improvement in operating profit margins.  This improvement was largely due to the impact of falling commodity prices and the group’s trading model whereby it seeks to achieve a fixed profit per tonne thus eliminating commodity price risks where possible.  Underlying earnings per share rose to 88.8p (2009: 76.3p) and the dividend was increased to 13.5p (2009: 11.8p). 

These were record results for the group and demonstrate the success of the group’s trading model.  After two years of heavy investment at the Maltby coal mine, which has seen gearing rise to 98%, the completion of that investment programme means that the focus will now be on cash generation although the group is well within its banking covenants.  Further profit growth is expected at the group with pre-tax profits likely to rise to £40.5m in the current finacial year for earnings per share of 104.5p.  We have upgraded the shares to a BUY